AstraZeneca share price rebounds following FY21 results update

[MongiIG]

In this article we review the AstraZeneca results and how the share price has reacted to the news.

Source: Bloomberg

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 10 February 2022 

AstraZeneca's fourth quarter (Q4) and full-year (FY) results have seen the group’s share price bucking the short-term sector trend as of late as it gains on the news.

A summary of the results is as follows:

• Total revenue for the year increased by 41% to $37,417 million including COVID-19 vaccine revenues
• Total Revenue for the year, excluding vaccines, increased 26% to $33,436m
• Reported earnings per share (EPS) of $0.08 in FY21 vs $2.44 in FY20
• Core EPS of $5.29 in FY21 vs $4.02 in FY20

FY22 outlook

AstraZeneca has provided the following in terms of the new financial year's outlook:

• The majority of vaccine revenue in 2022 is expected to come from initial contracts
• The Gross Profit Margin from the COVID-19 medicines is expected to be lower than the company average
• Core Operating Expenses are expected to increase by a low-to-mid teens percentage, driven in substantial part by the full-year integration of Alexion expenses
• Emerging Markets Total Revenue, including China, is expected to grow mid-single digits in FY 2022
• China Total Revenue is expected to decline by a mid-single digit percentage in FY 2022, primarily due to continued NRDL and VBP programme impacting various medicines
• The company remains confident in the longer term outlook for Emerging Markets, driven by a large market opportunity, broader patient access and an increased mix of new medicines

Comments on results

Double-digit growth across all of the group’s major jurisdictions, combined with the Alexion acquisition, has seen strong revenue growth for the group.

The reported drop in EPS (97%) reflects items related to the acquisition of Alexion, amortisation of intangibles, as well as impairments and restructuring charges.

The Core EPS figure, which omits the one-off items, highlights growth of around 32% in the group's primary operations.

While future earnings growth from COVID-19 products is expected to slow, the group is perhaps less reliant on these products than its peers, Pfizer and Moderna as a proportion of income and future growth.

Astrazeneca – technical analysis

Source: IG charts

 

The share price of AstraZeneca has formed a sharp bullish price reversal near the 8120 level and from oversold territory. The reversal suggests 8860 and 8960 respectively as upside resistance targets from the move.

Traders looking to go long might consider using a close below 8120 as a stop-loss indication for the trade, although will need to assess whether the risk-to-reward is a favourable enough opportunity for the position.